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Startup founder. I hold a B.S in Computer Science and have extensive experience and interest in technology, e-commerce, cryptocurrencies and online advertising industry (ad-tech). I worked with leading companies like Softbit, MediaFem, OLX Group, and Telecom. I am living in London, UK.

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Do fintech laws affect the cryptocurrency industry?

A year ago the so-called Fintech Law entered into force, which establishes the legal basis for the regulation and management of the cryptocurrency industry, digital assets, and blockchain in the country.

When they were published, it was announced that the most detailed provisions of the Fintech Law would come one year later, in addition to adding that a list would be given of which digital assets would be allowed in the country.

However, the new provisions have been somewhat controversial within the community due to their prohibitive nature in the use of cryptocurrencies by users of cryptocurrency platforms, such as exchanges.

Only internal operations

Reports pointed out that these provisions prohibit exchanges or platforms that provide cryptocurrency services from obtaining an operating authorization from Banxico because cryptocurrencies “have been characterized as volatile, expensive (…) and hardly scalable, besides representing risks for their holders since (…) could lead to the loss of their resources “.

Given this, the circular states:

“The use of technology such as distributed records, blockchain, or even virtual assets themselves in their internal processes could become feasible, as long as the risks of virtual assets do not impact the final consumer.”

In this way, Banxico prohibits service providers, such as exchanges, from granting cryptocurrencies of any kind to their users, therefore they can not prevent the risk associated with cryptocurrencies from reaching them.

“The operations that the institutions request to conclude with virtual assets through which they intend to provide their clients with services of exchange, transmission or custody of virtual assets will not be eligible for obtaining the authorization (…).”

Deadly blow to the industry

When asked by El Economista, Tomás Álvarez, founder of Volabit, explained that this is a “mortal blow” in the sector, since no “platform that buys or sells cryptocurrencies (…) can request this authorization to operate virtual assets. “